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The firm believes the bar for Nike is a Q3 beat with some flow-through of top-line upside that raises full-year revenue guidance along with constructive commentary on the 2024 setup and path to the targeted high-teens EBIT margin.
According to the firm, key areas of focus will be gross margin, China re-opening, innovation pipeline, North America Wholesale trends and strategy.
According to TD Cowen, intra-quarter digital reads show sustained brand heat, which may result in the company’s fiscal Q3/23 revenue guidance being conservative. Additionally, Nike is making progress in reducing its inventory in North America. In fiscal Q3, Similarweb unique digital visitors for NIke.com grew by a mid-to-high-teens percentage year-over-year on a three-month average basis, an acceleration from low double-digit growth in Q2.
“Further, our most recent Athlete Beat report indicates pricing is solid within top-selling SKUs for Nike,” added the firm.
TD Cowen is modeling 7% year-over-year revenue growth (vs. consensus of 5%), gross margin contraction of 250bps to 44.1% (vs. consensus of 43.7%,), EBIT margin decrease of 491bps to 10.1% (vs. consensus of 8.9%), and EPS of $0.61 (vs. consensus of $0.54).
“Our Q3 forecast includes $1B in share buyback and the quarterly dividend increase to $0.34,” added the firm.
By Davit Kirakosyan
